Texas Instruments falls after posting revenue miss,  disappointing outlook

  • The technology company reported $4.26 billion in revenue vs an estimated $4.3 billion
  • The company did beat estimates in earnings per share, reporting $1.58 a share. Analysts estimated $1.53 a share.
  • It expects revenue to be $3.6 billion to $3.9 billion in the fourth quarter.

Texas Instruments shares fell more than 5 percent in after-hours trade Tuesday after the company reported disappointing revenue and issued weak fourth-quarter guidance.

The semiconductor company reported $4.26 billion in revenue, falling short of a Refinitiv consensus estimate of $4.3 billion. Still, Texas Instrument's fourth-quarter revenue grew 4 percent year over year.

The company did post better than expected earnings of $1.58 a share. Analysts had expected earnings of $1.53 a share, according to a Refinitiv consensus estimate.

But Texas Instruments also issued a weaker-than-expected fourth-quarter outlook. The company said it expects earnings between $1.14 a share and $1.34 a share on revenue between $3.6 billion to $3.9 billion. Wall Street had projected fourth-quarter earnings of $1.38 a share on revenue of $4 billion.

The company said slowing demand indicates that customers may be looking ahead to the looming trade war between the U.S. and China. David Pahl, vice president and head of investor relations, said on the earnings call that the company is not stocking up on its inventory ahead of tariff implementation. He said that 60 percent of revenue is on consignment, so there is no inventory buffer.

"We're fairly early in the announcement schedule and lineup. So, we'll find out if there is inventory out there as more companies report," Pahl said.

The company said it will slow production to avoid too much inventory, if need be. It said, however, that it will not slash spending on research and development.